What is an unsecured debt?

An unsecured debt is a type of debt that does not have collateral attached to it. This means that, in the event of a creditor not being able to collect on the debt, the debtor is not liable for the debt in a legal sense. Examples of unsecured debt can include credit cards, medical bills, and personal loans. In North Carolina, unsecured debt is viewed as a lower priority than secured debt. This means that in the event of a debt collection, creditors may first seek to collect on secured debt before they can collect on unsecured debt. This is because secured debt, such as a mortgage or car loan, has collateral attached to it that can be sold in order to collect the debt. If a debtor fails to pay an unsecured debt, a creditor may seek legal action to try and collect on the debt. This can include filing a lawsuit or initiating wage garnishment. In North Carolina, however, a creditor is only able to garnish 25% of a debtor’s net wages, and this is only available as a last resort. In summary, an unsecured debt is a type of debt where there is no collateral attached to the debt. This means that, should the creditor not be able to collect on the debt, the debtor is not liable for it legally. In North Carolina, unsecured debt is a lower priority than secured debt and, if the debtor fails to pay the debt, the creditor may seek legal action to collect on the debt.

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What is an unsecured debt?

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